Expert Insights

Why inflation is a risk

Livewire Exclusive

Livewire Markets

High inflation seems to be a topic befitting of an ancient economics history syllabus. It’s hard to remember when sustainably rising consumer prices were an issue. Interest rates are at their lowest levels in history; inflation is going nowhere amid the state of the global economy. But BlackRock doesn’t buy into the narrative that low inflation will last in perpetuity, says Blair Hannon, ETF Specialist at the asset manager.

“With this coordinated monetary and fiscal policy, there is a chance of a blowout and a larger deficit than the market may expect, and one of the ways to solve that deficit problem is to inflate your way out of it.”

Building on that view, central banks are willing to let inflation temporarily overshoot targets to get price rises back on track. Here, Blair expands on this subject and discusses one way in which portfolios can prepare for an inflation shock.

 

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